Why gender inequality persists in corporate Japan

by Kumiko Nemoto

It might be expected that a surge in the number of highly educated women living in an advanced economy and under a democracy should increase gender equality in that society, including the number of women leaders in business. However, despite such a surge in Japan, it remains one of the least gender-equal advanced countries in the world, with women constituting only 11 percent of managers and only 3 percent of board members.

My new book asks why the number of women remains so low in upper management in Japanese companies in Japan.

The absence of women leaders in a workplace hierarchy and a large concentration of women at the bottom is known as vertical sex segregation. The vertical sex segregation of Japanese companies is closely related to corporate management, the employment structure, and institutional features that support corporate customs.

The Japanese business system prioritizes the lifelong employment of male workers in order to sustain the male-breadwinner family model and insider-oriented management, and to stabilize industrial relations. Workers are expected to devote themselves to one company, working long hours in exchange for rigid age-based promotions and pay.

Japanese companies have strong ties with their stakeholders, including large banks and financial firms, the Japanese government, and the courts, and they have maintained Japanese business’s – and political elites’ – reluctance to change traditional business practices and management customs. Though the Japanese government has promoted women’s reconciliation of family with work, it continues to embrace the male-breadwinner family over an egalitarian family model through its taxes and pensions.

The five Japanese companies I have observed have increased shareholder presence and cost-cutting pressures since the early 2000s, yet they did not change Japan’s traditional stakeholder-dominated style of management. Japanese firms, unlike U.S. management, which makes use of massive layoffs and performance-based pay, kept in place the system of lifelong employment with its salaries and hierarchy based on age. Although Japanese firms claim that they have started to use performance-based pay, in reality the system differs little from the seniority system, with raises kept small and promotions more difficult to obtain in order to lower labor costs.

I interviewed over sixty managers and workers at five Japanese companies: three financial companies and two cosmetics companies. All five firms have promoted women’s advancement to management and offered childcare leaves of over a year. Yet the number of women in middle and upper management is small in these companies, and gender equality reforms, especially in the areas of hiring, promotion, and work hours, remain limited in their effectiveness.

Most of the firms I studied continued to hire fewer women than men. Two financial firms used the track-hiring system and hired similarly educated women in different tracks: career-track (in which the women are promoted and paid the same as men), non-career-track (which is also called area-track, and involves no transfers, and limited promotion and pay), two-year limited-term hires, and part-time and temporary hires.

Sorting similarly educated women into different tracks suppresses women’s upward mobility and lowers their aspirations, offering little opportunity for promotion. It also heightens the women’s negativity toward each other and reinforces the workplace hierarchy, due to their differences in status and pay regardless of their similar educational backgrounds. In addition, it normalizes the idea that women serve as assistants to men, thus reinforcing the ideology of gender-separate spheres at work.

Working long hours remains a critical labor cost-saving tactic in Japanese companies. Most managers and workers I talked to worked overtime. The middle-level managers I interviewed saw their daily overwork as a necessary sacrifice, an obligation to their employer and their coworkers, a custom of physical and mental endurance, a tool to fully realize their masculine selves, and an opportunity for visibility, recognition, and leadership.

A small number of women managers is incorporated into this system: those who successfully prioritize their jobs over their personal and family lives. The culture of long working hours intensifies suspicion and serves as a physical and mental test for those women who challenge the firm boundary between the sexes that exists in the Japanese workplace.

The overall absence of men at home because of their long hours of work continues to impose a heavy burden on mothers, who must assume the full caretaker role, making it difficult for these women to do daily overtime without the extra help of family members or baby sitters.

Long working hours, when not compensated, often influence women’s aspirations and promote their wish to opt out. The women in their twenties and early thirties whom I interviewed in the cosmetics firms worked extremely long hours and expressed great dissatisfaction with the traditional seniority pay system. They also foresaw that their careers would be incompatible with their future family plans.

A system of age-based seniority promotions, which have little to do with individual performance or the number of hours that employees work, make women workers feel that their talents are being wasted.

Male managers often hold discriminatory views of women workers. The invisibility of women upper managers in the workplace makes it difficult for male managers to change their perceptions and traditional gender beliefs and to overcome their distrust of women workers, whom they often see as less competent than men, sometimes simply because they lack experience and professional training. These notions, often conflated with gender-essentialist assumptions about women’s characteristics, can lead to stereotyping.

The absence of women with authority in firms also influences female subordinates’ view of women in positions of authority as untrustworthy, rather than seeing them as role models or mentors. Some young women workers in cosmetics companies accepted gendered stereotypes, contrasting female bosses’ ostensibly “hysterical” and emotional treatment of workers with male bosses’ paternalistic and rational attitudes toward them.

Regardless of these problems, Japan’s system of lifelong employment still offers many workers long-term economic security and protection (though there are a large number of women temp workers without economic security). In fact, the lenient child-care policies and good economic security promised by the system of age-based promotion and lifelong employment could increase the number of women, particularly mothers, working in non-management positions. Working mothers whom I interviewed at the cosmetics companies were largely satisfied with their situation, even though very few of them held management positions.

Although increasing the number of women in Japanese upper management will require structural reforms, it is not clear whether changing Japanese companies’ long-term employment and stakeholder-based corporate governance into something more like the American model, which is shareholder-centered and driven by short-term profits, with a strong emphasis on individual achievement, large pay gaps, and dynamic labor market, would lead to a large increase in women managers in the context of Japan. Research points out that rewards based on meritocracy are not free from gender bias. High mobility in labor markets may not necessarily guarantee women equal job opportunities and a better chance of upward mobility.

Nevertheless, eliminating sex-segregated customs and increasing women in upper management in Japanese companies will require a substantial departure from postwar business customs. Looking at the case of Japan has shown that the progress toward gender equality in corporations will be slow when sex-segregated practices are explicitly legitimized in business management and employment customs, and when these are also reinforced by institutional players.